Problem Installing Caviar Blue 500gb HD

I just purchased a WD Caviar Blue 500gb PATA drive to replace my slow-churning Seagate HD. My PC (running XP) is setup to have a master & slave drive. 

I removed the Seagate, and installed the Caviar.  Left the shunt in Cable Select position, but upon powering up the PC, it didn’t recognize the Caviar, indicating “install boot-up disc” (or something like that.)

Changed the shunt positions to Dual/Master, then to Single.  All with the same result.

Looked that the BIOS at the next attempt, and it seems to recognize the Caviar as the primary HD. But will not run.

I can still use my PC by reverting to the Seagate, but I can’t understand why the Caviar won’t run.  

Any suggestions on what may be the problem? Do I have a bad out-of-the-box HD?